Monopoly as a source of market failure

Topics: Economics, Monopoly, Perfect competition Pages: 13 (7674 words) Published: October 30, 2014

Topic:Monopoly as a source of market failureDiscipline:Environmental & Natural Resource Economics Almaty, 2013

Contents:
1. TOC \o "1-3" \h \z \u Abtsract. PAGEREF _Toc373180946 \h 32. Introduction: The rise of a steel giant. PAGEREF _Toc373180947 \h 43. The Theory of Natural Monopoly. PAGEREF _Toc373180948 \h 53.1. A natural monopoly. PAGEREF _Toc373180949 \h 53.2. The costs of monopoly: PAGEREF _Toc373180950 \h 73.3. The benefits of monopoly: PAGEREF _Toc373180951 \h 83.4. Remedies for monopoly: PAGEREF _Toc373180952 \h 93.5. Do Monopolies Undermine The Environment? PAGEREF _Toc373180953 \h 104. ArcelorMittal: Going nowhere slowly. PAGEREF _Toc373180954 \h 124.1. Background. PAGEREF _Toc373180955 \h 124.1.1. ArcelorMittal Temirtau Kazakhstan PAGEREF _Toc373180956 \h 124.2. Overview. PAGEREF _Toc373180957 \h 144.2.1. Pollution. PAGEREF _Toc373180958 \h 144.2.2. Mittal’s social investments. PAGEREF _Toc373180959 \h 164.3.3. Perverse subsidies for ArcelorMittal Temirtau. PAGEREF _Toc373180960 \h 174.3.4. Lack of access to information. PAGEREF _Toc373180961 \h 175. Recommendations to ArcelorMittal’s management and shareholders. PAGEREF _Toc373180962 \h 195.1. To ArcelorMittal’s management and shareholders: PAGEREF _Toc373180963 \h 195.2. To local and national authorities in locations where Arcelor-Mittal is operating: PAGEREF _Toc373180964 \h 195.3. To the EBRD and IFC: PAGEREF _Toc373180965 \h 196. References/bibliography. PAGEREF _Toc373180966 \h 20

Abtsract.Environmental problems also occur when one of the participants in an exchange of property rights is able to exercise an inordinate amount of power over the outcome. This can occur, for example, when a product is sold by a single seller, or monopoly. A firm that has no competitors in its industry is called a monopoly. Monopolies are not all evil. Neither are they utterly good. Monopolies are much maligned because their profit incentive leads them to raise prices and lower output in order to squeeze more money out of consumers. As a result, governments typically go out of their way to break up monopolies and replace them with competitive industries that generate lower prices and higher output. Our study examines Arcelor-Mittal: the uncontrolled growth of this steel giant often at the expense of peoples’ health in a rapidly globalizing world has given people all around the world common cause for resistance.We have focused on Arcelor-Mittal Temirtau Kazakhstan which as we think is the best example of monopoly of market failure. Our paper work on “Monopoly as a source of market failure” explores global steel giant's environmental and social impacts in 2008-2009 that have emerged from the Environmental&Natural Resource Economics. First, we provide the background information about the theory of natural monopoly as a source of market failure. Then we show the certain case of such monopoly – ArcelorMittal Temirtau Kazakhstan. Our research analysis is divided to two parts: background information and social&environmental impacts of global steel giant's work in our homeland. Considering the situation and the current conditions of Arcelor-Mittal we then provide following solutions to the company that have to be implemented in order to enable it to overcome and or limit the potential problems in the foresseable future. This topic is very crucial and relevant not just only for our country to be mentioned and finally to be solved but also for the whole world as Arcelor-Mittal is operating worldwide. However it still neither has taken into account the seriousness of the problems that it has induced to the environment nor all of the responsibility. Introduction: The rise of a steel giant.We are all shareholders, maybe not in the company, but indeed in our environments, and shareholders of corporations such as ArcelorMittal need to be aware of this reality. Company shareholders are often blinded by the glossy reports, company greenwash and figures detailing...

References: bibliography:
1. Samuelson, W & Marks, S: 100. Managerial Economics 4th ed. Wiley 2003.2. Monopoly: A Brief Introduction by The Linux Information Project.
URL: http://www.linfo.org/monopoly.html3. Monopoly by Elmer G. Wiens: Online Interactive Models of Monopoly (Public or Private) and Oligopoly.
URL: http://www.egwald.ca/economics/econpage.php34. Monopoly Profit and Loss by Fiona Maclachlan.
URL: http://demonstrations.wolfram.com/MonopolyProfitAndLoss5. Monopoly and Natural Monopoly by Seth J. Chandler, Wolfram Demonstrations Project.
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